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Schlotzsky’s tries ditching seats

The sandwich chain’s new prototype features fewer seats or none at all and more options for takeout.
Schlotzsky's new prototype
Schlotzsky's new prototype includes a "Design 1,800" location with multiple drive-thru lanes and a few seats./Photo courtesy of Schlotzsky's.

What’s the point of seats if customers are taking their food to-go all the time? Especially when labor is short?

It’s a question a growing number of restaurant chains are asking right now, including the sandwich concept Schlotzsky’s. The 300-unit chain, part of the Atlanta-based Focus Brands, has debuted what it calls a “Design 1,000” location in Oklahoma City that features more drive-thru lanes (2) than seats (0).

“This is just kind of a natural evolution for the Schlotzsky’s business,” Shelley Harris, the chain’s interim chief brand officer, said in an interview. “As we see consumer behavior changing toward more speed, convenience and variety, order channels became more and more prominent. We knew we needed a bit more cutting edge, smaller footprint, maximum off-premise needs.

“Then 2020 hit and all that got dramatically accelerated.”

Schlotzsky's prototype

Schlotzsky's seatless Design 1,000 prototype./Photo courtesy of Schlotzsky's.

Schlotzsky’s has a drive-thru in about 85% of its locations, and the lanes account for about half the chain’s sales. Yet that percentage has been growing going into the pandemic, much as it has everywhere else.

The company introduced a pair of new options with its new prototype. The Design 1,000 prototype is a 1,000-square-foot restaurant with new dining area, two drive-thru lanes and a walk-up window for mobile orders. There is a larger, 1,800-square-foot prototype that has some limited seating and two drive-thru lanes.

The new prototype features a traditional drive-thru lane and a mobile-order lane. The walkup window also gives customers options when they aren’t driving in—or they don’t want to sit in the lane. The company expects it will have to teach customers to use the window over time.

Schlotzsky’s tested the concept on a corporate location first and plans to tweak the concept to improve efficiency.

The chain will continue allowing operators to open the chain’s traditional, 3,300-square-foot prototype, which has about 90 seats. “It’ll be interesting to see where that plays out as real estate gets more expensive and more growth comes from the drive-thru from customers more interested in eating off-premise than on-premise,” Harris said.

Indeed, demand for drive-thru sites has soared coming out of the pandemic and that is not expected to change anytime soon. That makes flexibility in real estate vital for expanding concepts. The smaller prototypes give Schlotzsky’s franchisees far more options for expansion than the larger model.

Schlotzsky's interior

Schlotzsky's 1,800-square-foot prototype features some limited seating./Photo courtesy of Schlotzsky's.

Labor is another component. The simple fact is, a 1,000-square-foot location is more efficient than a 3,300-square-foot restaurant. “Not having to clean the dining room, with a limited amount of labor, they can deploy that labor to the kitchen,” Harris said. “That’s helpful with speed of service, it gives relief to the kitchen staff.”

The smaller prototypes will also feature a lower buildout cost, another important factor given rising construction costs and increasing interest rates—which is making the debt many operators need to open these locations more expensive.

Schlotzsky’s system sales rose 23% last year, according to data from Restaurant Business sister company Technomic, and are up more than 3% over 2019 levels. The company is eager to push into new markets while continuing to build out existing markets, such as Texas and the Carolinas.

“We can identify where we can take a prime piece of real estate and make that economically work,” Harris said. “This really is opening up flexibility, helping us partner with landlords and making it cost-effective for the franchisee.”

UPDATE: This story has been updated to correct that Schlotzsky's Design 1800 prototype does not feature a walkup window. 

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